Managing finances can be challenging for non-profit organizations. Fortunately, tax credits are available that can help non-profits save money and reinvest it in their mission.In this article, we will explore some of the federal and state tax credits that non-profits can take advantage of, as well as other tax credits and exemptions that can benefit them.
Federal Tax Credits
New Markets Tax Credit:
This credit allows non-profits to claim 39% of their total investment over a seven-year period if they invest in low-income communities. By utilizing this credit, non-profits can support economic development in disadvantaged areas.
Work Opportunity Tax Credit:
Non-profits that hire individuals from targeted groups, such as veterans or individuals receiving government assistance, can claim a percentage of the first-year wages of these employees. This credit encourages non-profits to provide employment opportunities to those who face barriers to finding work.
Empowerment Zone Tax Incentive:
Non-profits operating in designated empowerment zones can claim 20% of the first $15,000 in wages paid to employees residing in these zones. This credit aims to stimulate economic growth and job creation in economically distressed areas.
Research and Development Tax Credit:
Non-profits engaged in research and development activities can claim a percentage of the expenses related to these activities. This credit encourages innovation and technological advancement within the non-profit sector.
State Tax Credits
State Historic Tax Credits:
Non-profits involved in preservation and restoration activities on historic properties can usually claim a percentage of the related expenses. This credit promotes the preservation of cultural heritage and historic landmarks.
State Job Creation Tax Credits:
Non-profits that create new jobs within their state can claim a percentage of the total wages paid to these employees. This credit incentivizes non-profits to contribute to local job growth and economic development.
State Renewable Energy Tax Credits:
Non-profits investing in renewable energy projects can usually claim a percentage of their total investment. This credit encourages the adoption of clean and sustainable energy sources.
State Sales Tax Exemptions:
Depending on the state, non-profit organizations may be eligible for exemptions from state sales taxes on certain purchases, such as goods used for charitable purposes.
Tax Credits for Non-Profit Fundraising
Charitable Gaming Tax Credits:
Some states provide tax credits for non-profit organizations that conduct charitable gaming activities, such as raffles or bingo.
Film Production Tax Credits:
In certain states, non-profit organizations involved in film production or hosting film festivals may be eligible for tax credits.
Tax Credit Group Can Help
Tax credits can be an effective way for non-profit organizations to save money and reinvest it in their mission. Non-profits should explore all available tax credits to maximize their savings and allocate more resources towards their mission. Please note that tax laws and credits can vary by jurisdiction, so it’s important for non-profit organizations to consult with tax professionals such as Tax Credit Group or legal advisors to determine their eligibility and specific requirements for these credits.